Office Enterprise, Inc.

The Maddux Report, a St. Petersburg publication that covers Florida's central west coast, reports,

IT’S OFFICIAL: 2009 is the worst on record for Tampa Bay’s office leasing market. The region’s vacancy rate rose to its highest point in 17 years; meanwhile, net move-outs plunged to the worst levels seen in years; 25 years – a negative 1.14 million sf. The two largest counties, Hillsborough and Pinellas, account for nearly 80 percent of that hemorrhaging.

One bright spot was downtown St. Pete which actually showed a net gain in leased commercial space. However, further investigation revealed that most of the absorbed footage came from a single transaction. St. Petersburg Medical took 34,000 sq. ft. in a 109,000 sq. ft. building (built in 2007) at 625 6^th Avenue S. The building’s remaining 75,000 sq. ft. remain vacant.

Dealing only on the tenant's behalf, my clients are firmly in the driver's seat when it comes to terms and rates. Hopefully this reversed situation will last a while longer.

Just How Low Can This Go - Maddux Report

Last week in the St. Pete Times, real estate writer James Thorner reported that “office space glut in Tampa Bay means 'negotiable rent.'”

This has been the case for sometime now and will continue to be, at least as long as unemployment is rising. Employers, afterall, only need space for employed workers.

In my opinion, the current situation is a generational opportunity for renters. We've seen nothing like it since the early 1980s.

Here are three steps you can take to take advantage of historic low rents.

Step one: Plan

Making the right decision about your space takes time and careful planning. How many employees do you have? Do you anticipate having? Where do they live? Where do most of your customers live? How committed are you to your present location? These and countless other questions require generous lead times. Two years from your lease expiration is not too early to start.

Step two: Evaluate

Lease or purchase, this is the shopping phase. Once you are firm in the kinds of space and location that you need, you can start looking at space.

Step three: Negotiate

What base rent is your present landlord seeking? What incentives will the competition offer in terms of buildouts? Will your present landlord offer inducements for an early "blend and extend" renewal? Is a purchase price too good to pass up?

Today's low rents and prices are a generational opportunity. No matter what your present lease expiration situation is, you need to explore how today's low rents and prices can decrease your opperating costs for years to come.

For a large tenant the optimal amount of time you want to have before your lease expires is two years.

Here's how it works.

For about a year you and I, your tenant rep, need to get to know each other. Leases average about five years and over that time things in your business invariably change. For example large law libraries have disappeared. It's becoming  all digital so attorneys don't need that space anymore. Offices need fewer secretaries, if any at all. Maybe your customer base moved. Your key employees may have changed their responsibilities and live in different areas.

These and other factors can be important input into the decision to negotiate a renewal where you are of identify an ideal location for your business. It's information that I need to know and you need to share if you want to be happiest for the next five years.

Office space absorption^? is a periodic comparison measurement of the growth or shrinkage in the amount of occupied office space under lease in a specific market area. Usually space still in construction, available for sublease^?, totally owner occupied and smaller single tenant buildings are not included.  

The average length of a lease agreement is 30 pages. Every one is packed with jargon and expressed in very small print. It's mind-numbing. Familiarizing yourself with a modern lease is a long and arduous task. Operating a fulltime office leasing agency^def I feel lucky that I've had 30 years learn its tricks and traps. Believe me, there are many.
Just think. A hundred dollar oversight in the landlord's favor will cost you $12,000 over the life of a ten-year lease. How many oversights are possible in a 30-page document? Quite a few and they all potentially take money (unnecessarily) out of your pocket and put it into your landlord's.